Greystone Canadian Equity and Balanced Fund revised Investment Policy

February 10, 2014

Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans. Sun Life Assurance Company of Canada purchases units of the funds listed below, which are established as segregated funds in accordance with the Insurance Companies Act (Canada).

Effective January 1, 2014, Greystone Managed Investments Inc. (Greystone) has made a small revision to its investment policy for the Greystone Canadian Equity Fund offered on Sun Life Financial's core investment platform.

What has changed?
In the Industry Sectors Limits section of the policy,  the maximum sector constraint for those sectors that comprise less than, or equal to, 7% of the S&P/TSX Index has been increased from Sector + 5% to Sector +7%.  The reason for the change is related to the material decrease in the Information Technology (IT) sector's index weight.
    Prior to January 1, 2014 Effective January 1, 2014
S&P/TSX Composite Index Sector Weight  Minimum Maximum Maximum
 Less than or equal to 7%  0% Sector +5% Sector +7%
 Greater than 7% to 20%  0.25x Sector Sector +10% Sector +10%
 Greater than 20%  0.50x Sector Sector +15% Sector +15%

Greystone will also be moving the strategic target weights of the Greystone Balanced Fund benchmark effective April 1, 2014.

What has changed?
The change will mean an increase to the weights to U.S. and Non-North American equities, both from 12.5% to 18.0%, while the weight to Canadian equities will decrease from 35.0% to 24.0%.  The overall benchmark will remain at 60.0% equities.

The specific changes to the Greystone Balanced Fund benchmark taking effect April 1, 2014 are summarized in the following chart:   

Asset Class


Current benchmark

New benchmark

Short-term DEX 91-Day T-Bill Index



Bonds DEX Universe Bond Index



Canadian equities S&P/TSX Composite Index



U.S. equities S&P 500 Index in $CAD



Non-North American equities MSCI EAFE Index in $CAD



Greystone believes that diversification can improve the efficiency of an overall portfolio by reducing risk and potentially improving returns. From a global perspective, diversification is particularly important for the following reasons:

  • Not all countries are experiencing growth at the same rate or to the same degree as each country may be at a different phase within the economic cycle;
  • The Canadian market currently represents only 3.8% of the world's total market capitalization; and
  • The U.S. and MSCI EAFE benchmarks provide sector diversification as they have lower weights to the Energy, Materials and Financial sectors in comparison to the S&P/TSX Composite Index.

Historical data supports the risk-reducing potential of foreign equities. The 15 years annualized standard deviation (measure of risk) of Canadian, U.S. and international (Non-North American) equities is 16.6, 13.5 and 14.3 respectively.**

The Greystone Balanced Fund holds units of the following funds which are also impacted by the policy revisions, the: Greystone Canadian Equity Fund, Greystone International Equity Fund and Greystone EAFE Growth Fund. Policy revisions have been made to the following funds effective January 1, 2014:

Greystone Canadian Equity Fund  

  • See above

Greystone International Equity Fund   

  • In the Regional Diversification section of the policy the Pacific ex-Japan region weight has been lowered from 0% to -10%.
  • At the time of the start-up of the fund, the Pacific ex-Japan region was less than 10% of the benchmark, so it was deemed appropriate to have the lower bound as 0%.  Currently the weight of the region is about 12.5% of the benchmark, so the lower bound of the region would be more appropriately Region -10%, as opposed to 0%.

Greystone EAFE Growth Fund   

  • Changes were made in the policy to note that Hansberger Global Investors closed the Mumbai and Moscow offices in Q1 2013, and that the Hong Kong office was scheduled to close in Q4 2013. The international value team had employees in the Mumbai and Moscow offices which Hansberger closed, and after deciding to centralize the trading team in the Fort Lauderdale location Hansberger also closed the Hong Kong office. There were not any investment growth team members located in any of these offices. The growth team is located in the Toronto office, and has remained stable, adding an investment resource in 2012. There have been no departures from the growth team since inception.
  • In the Holdings section of the policy the single security limit was raised in 2011 from 3.5% to 4.5%. At that time the typical range of securities should have been revised. The new range is 50 to 70 (previously 60 to 70) securities. Hansberger decided to make a minor change after reviewing their ability to outperform, and determined that holding more of the “winning” securities contributed to value added, without increasing risk.

Greystone's Investment Policy outlines the investment objectives, risk factors, strategies and guidelines for the investment funds managed by Greystone Managed Investments Inc. A copy of the revised Investment Policy is available on the Sun Life Financial Plan Sponsor Services website at When logged into the website, under the Administration and reporting tab, select Group Retirement Services, then on the top navigation menu select Investments >Investment news.

Please contact your Sun Life Financial Group Retirement Services representative.

**Source: Morningstar. Data represents standard deviation of monthly returns from September 1998 to September 2013